Morocco overview

Strong capital growth - 15% p.a. Incomparable scenery and culture

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“Marrakech has long been the focal point of most European property investors looking to buy in Morocco – and for obvious reasons. Aesthetes can hardly fail to be won over by the city’s medieval-style layout and its historic riads, often clustered around cool little squares, sheltered from hot African sun.” The Financial Times, June 2007

“In a nation with a wealth of fine cities, Fez exudes magic and magnificence. The birthplace of Imperial Morocco is the most complete medieval city in North Africa, and the most exotic place that you can reach within three hours of Gatwick.” The Independent, November 2007

“Morocco has grabbed Britons’ attention in 2007, with Marrakech now a mainstream city-break destination thanks to Easyjet’s arrival and King Mohammed VI’s drive to turn his country into a major tourism destination by 2010. Prices have risen by 15-20% this year and the tourism push is also seeing secondary cities such as Fez and Tangier benefit from big investment and fledgling foreign interest.” The Telegraph, December 2007

Morocco

How to get thereBritish Airways fly to several airports across the country including Agadir, Casablanca, Marrakech, Sais, and Tangier. Easyjet fly from London Gatwick to Marrakech daily as do Ryanair (from Luton).

Easyjet and Ryanair also connect the country to other European destinations.

Approximate flight times to Morocco:

Marrakech 3 hrs 30 mins

The North African Kingdom of Morocco has been a must-visit destination on the adventure-traveller trail for decades. But now, thanks to King Mohammed VI’s ambitious Vision 2010 initiative to increase tourist numbers, improve infrastructure and encourage foreign investment, the country’s exotic beauty is now accessible to all. Budget airlines are taking full advantage of the new open-sky policy, exploiting the country’s proximity to Europe. With one tour operator already claiming a 700% increase in bookings and the WTTC projecting a 4% rise in visitors in �007, the time is right to invest in this already booming market.

Morocco at a glance

Total area: 446,550 km�

Capital: RabatPopulation: 33,�41,�59 (July �006 est.)Currency: Moroccan dirhamClimate: MediterraneanLanguages: Arabic (official), French, BerberGovernment: Constitutional monarchyLocal time: GMT/UTC + 0

Atlantic Ocean

ALGERIA

RABAT

Mediterranean Sea

Casablanca

MOROCCO

SPAINPORTUGAL

Safi

Agadir

Bou Arfa

Ouarzazat

Oujda

Tarfaya

Marrakech

Tangier

Fez

TiznitMirleftAglou Plage

Sidi Ifni

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Why invest in Morocco?Political reformKing Mohammed VI has introduced various constitutional reforms and initiatives which include, for the first time in Morocco’s history, a system resulting in 30 female MPs in Parliament. When a monarch starts addressing women’s rights, you know a country is serious about reform and taking its place in a modern world. The change of a traditional mindset to more liberal and progressive policies shows a willingness to change on a fundamental level. It also means foreigners will feel more comfortable living in that society as opposed to just taking a holiday there.

Attractive retirement locationMorocco is an attractive place to retire to. Retirees benefit from 80% tax exemption, provided that their pension is still being transferred from the UK. In Morocco, Western residents are free from double taxation and have the right to own property without complications. Foreign retirees in Morocco number around 45,000 and this figure is set to grow.

Favourable tax structureMorocco has adjusted its tax laws to make it a more attractive place to buy property. These include: between 0% and �0% tax on any capital gains (�0% if a property is sold within 5 years, 10% if sold within 10 years and 0% if sold after 10 years), 0% inheritance tax to family and no annual property tax for first 5 years.

The Vision 2010 initiative and Plan AzurKing Mohammed VI came to the throne in 1999 and since then has been keen to modernise Morocco, attract investment and increase tourism. To this end, he devised an initiative to attract 10 million visitors per year to the country by the year �010. In the Plan Azur phase six new developments are to be built on the Mediterranean and Atlantic coasts, with improved infrastructure to support these resorts, including the upgrading of existing airports and building of several new ones, creation and upgrading of ports and marinas and improvements to the motorway and high speed rail networks. These improvements will benefit all parts of the country, not just the new resorts.

Investment-seeking governmentIn addition to the tourism initiatives introduced, Morocco is keen to attract foreign investment to the country. There are many different figures speculating about Morocco and potential capital growth gains with some quoting as much as 30%1, but growth of approximately 15% is more realistic. Companies like Nokia, IBM, Dell and Intel are amongst many who have invested in the country.

Stable economy with strong EU linksMorocco and its economy have experienced some excellent growth over the last few years. The Dirham, Morocco’s unit of currency has experienced growth of 18% since 1990. In addition the economy is expected to be boosted further if, as is expected, Morocco becomes part of the Euro-Med free trade zone. This is part of the Vision �010 national development plan, which is also designed to establish a close relationship with the EU.

Booming tourismMorocco has long been a popular holiday destination, among the Spanish (thanks to its geographical proximity), and the French (Morocco is a former protectorate of France). It has also attracted intrepid travellers from further afield, and the introduction of low cost airlines will only increase this. Moroccan tourism is expected to grow by a healthy 4% in �007. Figures show that arrivals in the first four months of �006 were up 15-��% on the previous year�. The solid tourism market means strong demand for quality rental properties.

Raw beauty - Exotic culture Morocco is full of stunning contrasts with laid-back sandy beaches on the north and west, the busy cities of Marrakech and Fez at its core and the Atlas Mountains, where you can hike in summer and ski in winter, forming the backbone of the country. Its cities are a riot of colour, smells and people, full of traditional Moorish buildings and riads – houses built around a central garden and fountain. A truly exotic destination.

1. Homes Overseas Magazine�. www.telegraph.co.uk/travel/main.jhtml?xml=/travel/�006/07/08/etmorocco08.xml&page=5

Low cost carriers put Morocco in easy reach of UKMorocco signed an open skies policy, effective from 1st January �006, giving a clear signal of their determination to open up the country to tourism. This has put Morocco on the map as a weekend getaway/short break destination from the UK and pushed property prices up accordingly. Another option is to use the low cost airlines to fly to the south of Spain as a fast ferry service operates from Malaga which takes only 35 minutes to Tangier.

Low cost of living The cost of living in Morocco is far lower than most European destinations. In a list of global cost of living rankings compiled by Mercer in �006 figures, the only entry for Morocco was Casablanca at number 88 (London is currently number two). A beer costs around €0.80.

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1. www.moroccotimes.com/paper/article.asp?idr=11&id=156�3�. www.ec.europa.eu/comm/external_relations/morocco/intro/#enp

Political overviewMorocco is a Muslim country and a constitutional monarchy. Until 1956, it was a protectorate of France. On independence, the country’s ruling family returned to the throne. Gradual constitutional reforms led to the current bicameral system of government which first convened in 1997. The current king, King Mohammed VI, acceded to the throne in 1999 and is keen to modernise Morocco. He has instigated major reforms and improvements to the country’s economy and legal structures, and has taken steps to address human rights abuses during his father’s reign, which has been recognised and acknowledged by Amnesty International as being “the first truth commission in the Middle East and North Africa.”1 Though much remains to be done to redress and compensate former victims.

Morocco is a participant of the European neighbourhood policy�, which it sees as a means of obtaining, “advanced status,” in its relations with the EU, as expressed by the king of Morocco. The country is also a major non-Nato ally of the USA, as of June �004.

The constitution guarantees a multi-party system. Twenty-nine political parties are represented in the lower house, the chamber of representatives. The Prime Minister is the former minister of the interior, Mr Driss Jettou. He heads a governing coalition made up of six parties. Thanks to a special system of national lists, for the first time in Morocco’s history, 30 women sit in Parliament.

King Mohammed VI of Morocco

Economic overviewKing Mohammed VI is committed to boosting his country’s economy. His ambitious tourism plan, Vision �0101, set goals to increase investment in the country’s new resorts to €8-9 billion, increase tourist numbers to 10 million and create €48 billion in foreign receipts. These combined factors would mean that the tourism sector could potentially contribute almost �0% to Morocco’s GDP by the year �010. The King is also intent on addressing Morocco’s difficulties with poverty and unemployment – Vision �010 includes plans to create over 600,000 jobs in the tourism sector.

Morocco has long-established links with the European Union, with France, Spain, and the UK being the top three export partners with the country�. Morocco has also signed a free-trade agreement with the USA. The King has introduced banking reforms and liberalised trade to attract investment, the country is currently the fourth largest recipient of foreign direct investment in North Africa.

In order for the economy to continue to flourish, Morocco’s government has embarked on a major infrastructure improvement programme. Morocco’s Prime Minister has invested over €4.4 billion in upgrading the country’s infrastructure over the last five years, and a high-speed train linking Tangiers and Agadir costing €9 billion is planned for �0303.

Morocco’s reforms and forward-facing attitude is reaping economic and worldwide dividends. The International Monetary Fund had this to say in a �007 report:

“Executive Directors. . . welcomed Morocco’s remarkable economic progress in recent years, which demonstrates the benefits of broad-based structural reforms. GDP growth has moved onto a higher trajectory, inflation has been contained, foreign direct investment has increased, and poverty and unemployment have been reduced significantly4.”

1. www.tourisme.gov.ma/english/�-Vision�010-Avenir/1-en-bref/enbref.htm�. www.fita.org/countries/morocco.html3. www.eubusiness.com/news-eu/11961865�1.69/4. www.imf.org/external/pubs/ft/scr/�007/cr073�3.pdf (page 36)

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Tax in MoroccoProperty taxSimilar to UK council tax, property owners in Morocco are required to pay an annual property tax. However, as an investor the amount due is dependent on the total annual rental income (see the table bottom left) and not the value of the property. There is an exemption of this tax for the first 5 years.

In addition there is also a maintenance tax (often called the garbage collection tax) which is set to 10% of the property’s annual rental income. Again this tax is exempt for the first five years.

Property rental tax Income tax due on rental monies is set at 13.5%. This is payable from purchase.

Capital gains tax If the property is sold within 5 years from purchase then the capital gains tax is set at �0% of profit, subject to minimum of 3% of the sales price of the property.

If the property is sold between 5 and 10 years from purchase then capital gains is charged at 10%.

If the property is held for over 10 years then no capital gains tax is due.

Inheritance tax If you organize a Moroccan will, there is 0% inheritance tax to family members.

Dual tax treatyA dual tax treaty exists between the UK and Morocco which means that you do not have to pay capital gains twice.

UK tax specialistIf you would like to speak with a UK accountant with regards to your tax position, we use Drew Hazell at Tayler Bradshaw and find him highly knowledgeable. His number is 01799 525 407.

As with all tax systems, rules in Morocco are complex and you are advised to seek advice from a tax specialist. However, here is a guide to what you can expect as a UK investor purchasing a property for investment purposes. With Salama Valley, the management company bears many of these costs. Please see the document for more information.

Annual rental income

Less than 3,000 dh 0%

3,000 to 6,000 dh 10%

6,0060 to 12,000 dh 16%

12,000 to 24,000 dh �0%

24,000 to 36,000 dh �4%

36,000 to 60,000 dh �8%

More than 60,000 dh 30%

(£1 = 16.4 dh)

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Why invest in Marrakech?

Historic sites to visit and stunning natural beautyMarrakech and the surrounding area is awash with cultural and historic sites. The medina in Marrakech is a UNESCO World Heritage Site, one of eight in the country. Marrakech is dotted with museums, palaces, mosques and cool gardens, the most famous of which, Jardin Majorelle, was restored to former glory by the designer Yves Saint Laurent. The countryside around the city is amazing too – the Atlas Mountains loom large and provide breath-taking scenery as well as varied outdoor activities.

70% mortgages available for off-planMany emerging markets offer far less flexibility than the more established markets when it comes to finance options, and often mortgages are not readily available. However, it is possible in Morocco to borrow up to 70% of the value of the property over 15 years at reasonable interest rate (currently around 5.5%).

Beautiful exotic city Known as the “Pink City” because of the local red stone it is built from, Marrakech is invariably described as exotic. Perhaps it’s the fabulous Moorish architecture, the famed hospitality of the Moroccans or the sights and sounds (and smells!) of the medina, Marrakech is a treat for the visitor – different, unfamiliar, but bewitching, with views of the impressive Atlas Mountains to the south. However, it is also an important commercial centre, on an ancient trade route between the north and the south of the country, and is today the nexus of several major motorways. It is also a thriving city with a population of just under 1 million and a vibrant economy. Cities generally have greater capital growth as the demand for property is always strong – people move to cities for work and need housing. Marrakech also has some beautiful suburbs and boasts many million euro- plus villas.

With a modern urban infrastructure, excellent international air links and some world-class golf courses, Morocco is developing into an investment destination of choice. Yet no matter how developed the rest of Morocco gets, the Pink City of Marrakech will always be a world away in its exoticism.

Fantastic year-round climateMarrakech boasts hot summers and mild winters with an average of 3�0 days of sunshine per year. Average temperature in summer is 35oC and in winter is ��oC. If the heat in the summer becomes too much, it is easy to escape to either the freshness of the mountains, or to the beach to cool down in the sea.

Knock-on effects and benefits of improvements due to plan 2010Morocco’s ambitious plan to increase tourism to the country by �010 will have benefits for the entire country, not just the new coastal resorts. The huge volume of visitors will create rental accommodation requirements across the country, increasing demand in places like Marrakech. The infrastructure improvements will also benefit non-resort areas. Marrakech has always attracted visitors and second home owners as it is a fully functional, authentic city, offering a more sophisticated cultural experience and so much more than sun, sea and sand.

Low cost carriers fly to MarrakechEasyjet fly daily to Marrakech from London Luton, flight time around three hours, fares from £65 return. Other low-cost carriers are set to follow – Ryanair and Thomsonfly will begin flights later this year, and Atlas Blue already serves this route. Once these carriers are all on board, there will be 99 flights per week between London and Marrakech. This is now a recognised phenomenon in property investment – when a destination is targeted by low-cost airlines, property prices rise accordingly.

Sophisticated destinationMarrakech has two luxury hotel developments within easy reach of the city – the world renowned Aman resort was the first of that group in Africa and Richard Branson has recently opened his 6-star Kasbah Tamadot resort. These kinds of developments establish Marrakech’s reputation as a premium destination. They attract a certain level of clientele who are happy to pay for excellent accommodation. This is good news for those investing in quality property in the area at this time as they benefit from this reputation.

Excellent holiday rental market Morocco has a solid tourism base and can boast 85% rental occupancy in most cases over the high season. It is possible to cover mortgage payments and bills for the year through rental gains achieved in the high season (June - September). With the number of tourists set to grow faster than the amount of available accommodation this figure is expected to grow, meaning higher occupancy levels for investors and even potential growth in rental prices as demand increases.

Plenty to do – superb amenitiesIn Marrakech or within easy reach of it there are top quality golf courses, tennis clubs, riding clubs, hunting, hiking, camel treks, and skiing in the Atlas Mountains. Marrakech is an hour and a half’s drive from the coast where you can swim, water-ski, sail and scuba dive.

Fashionable overseas home locationMarrakech has long been a destination for the wealthy and present day second-home owners include Yves St. Laurent, Mick Jagger, Richard Branson and the Beckhams. It has often been the case that where the high-profile go, savvy investors follow, knowing that the publicity that these people bring will increase general interest from the buying public and influence their choice of holiday destination.

FAQsQ: Do I need a visa to enter Morocco? A: No. You do not require a visa to enter Morocco if you are an EU passport holder.

Q: What nationalities can buy in Morocco?A: Any nationality, resident or overseas can purchase property in Morocco.

Q: What documentation will I need?A: Your passport is the only documentation you will need to purchase a property in Morocco.

Q: What mortgages are available?A: The following mortgage terms are currently available: • Loan amount – 70% maximum LTV • Term – 15 years • Maximum age – 73 years • Affordability – status based (proof of income will be required) • Currency – Moroccan dirhams or euros Q: Are there additional costs in respect to my purchase price?A: Yes. As with any property transaction there are other fees that need to be covered such as legal fees, stamp duty (or the foreign equivalent) etc. You should allow for an additional 5% of your purchase price in Morocco.

Q: Do I have to be in Morocco to complete the transaction?A: No, Ready�invest will help arrange a Power of Attorney to be granted to a third party lawyer enabling them to act on your behalf. This should be in the Moroccan form and signed in front of a Notary.

Q: Is there a Land Registry system in Morocco?A: Yes. After the Full Contract/Deed of Sale (acte de

vente) has been signed the Notary will arrange for it to be registered at the appropriate Land Registry and for the payment of any Land Registry fees.

Q: How do I know if the land has good legal title?A: Ready�invest carry out complete due diligence on the title of all land and property that we release. We are satisfied with the security of the title of the Moroccan developments and the legal system supporting it.

Q: Do I need to find a lawyer?A: No, Ready�invest carry our extensive due diligence on a number of legal firms in each country. We will recommend a suitably experienced English speaking lawyer for you to use. This lawyer will act on your behalf and will be independent to both Ready�invest and the Developer.

Q: What tax will I have to pay on the sale of my property? A: If the property is sold within five years from purchase

then the capital gains tax is set at �0% of the profit made, subject to minimum of 3% of the sales price of the property. If the property is sold between five and 10 years from purchase then capital gains is charged at 10%. If the property is held for over 10 years then no capital gains tax is due.

Q: Are double taxation treaties in place?A: Morocco is a signatory to a treaty for the prevention of double taxation with 60 countries throughout the world, including the UK.

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